Mortgages

Not all advisers are the same

For the vast majority of people their home will be the biggest financial commitment that they will ever make.

In this post credit crunch world, lenders criteria varies enormously – where one lender may say no, another lender would happily lend. It is more important than ever to obtain the right advice.

Arranging a mortgage is one of the most important decisions of your life. Not every mortgage is the same however.

Most mortgage lenders hide fees in many ways and homeowners who have not taken mortgage advice could easily find themselves paying thousands more by being locked into excessive mortgage penalties.

The only way to ensure that you find the deal that is best for you is to talk to a professional who has access to the whole intermediary market. Most advisers cannot do this.

As our name suggests, at Choice Financial Solutions we offer you the widest level of choice and access to the whole of the market.

Types of Mortgage

Fixed

A fixed rate mortgage gives you peace of mind on outgoings. With a fixed mortgage you know that whatever happens to interest rates, your monthly payments will stay the same for the agreed period.

Fixed rate mortgages are available for many different periods of time – two years, five years and ten years are typical examples but there are different fixed rate mortgage periods available.

Fixed rate mortgages often have an early repayment charge which will vary from lender to lender. Normally, this only applies during the fixed rate period itself but some fixed rate mortgages do have repayment penalties beyond this period.

One disadvantage of fixed rate mortgages is that you will not benefit from any fall in interest rates during your fixed period and your payments will remain exactly the same. At the end of the fixed rate period your payments will generally revert to the lender’s standard variable rate (SVR).

Fixed rate mortgages are very popular and are very suitable for people who want to know exactly how much they are going to be paying each month. They will also protect you against rising rates.

Trackers & Discounts

Tracker and discounts are ultimately variable rates. The difference between a tracker rate mortgage and a discount rate mortgage is that a tracker mortgage is linked to the Bank of England interest rate so your mortgage will be guaranteed to move in line with Bank Rate. With a discount rate mortgage you are linked to a lender’s Standard Variable Rate, which they can move as they see fit. On this basis, we generally recommend tracker rates above discount rates. The best tracker or discount mortgage for you will depend on your specific requirements.

Trackers or discounts can apply for the life of the mortgage or for an agreed period of time. Often people will look to benefit from lower payments for a few years and then look to remortgage to a new lender and benefit from another deal.

Capped
A capped rate mortgage is a variable rate that has a ceiling level – The “Cap”. This mortgage may help you benefit from a lower rate initially and also gives you an element of peace of mind because you know it will not rise above a certain level for an agreed time.

Offset

An offset mortgage allows you to hold money in a linked savings account, which reduces what you owe on your mortgage on a daily basis. The mortgages are more complex and we often only recommend them in more specialist circumstances.

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